Every so often, things fall apart.
In the words of those who lived it, here are the vibes and the semantic signatures of the twentieth century’s most devastating social collapses.
From the meaning in their words, wisdom for our future emerges.
Recent major media stories that feel to us like they’re part of a larger narrative campaign.
Recent major media stories that feel to us like they’re part of a larger narrative campaign.
The cure for the cancer of gun culture and police culture is not to be found in reform laws around guns and police, but in reform ideas around culture, ideas that create a new dimension of American society that rejects LARPing and LARPers alike.
Inflation
What made Bitcoin special is nearly lost, and what remains is a false and constructed Narrative that exists in service to Wall Street and Washington rather than in resistance.
The Bitcoin narrative must be renewed. And that will change everything.
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Crypto
Recent Notes
Things That Go Bump In The Night
Everyone reading this note has, at one time or another, gotten scared about markets and decided to hedge their professional portfolio or personal account. The Game of Markets is changing. But should we be scared?
Year In Review
We’ve had a heckuva busy year at Epsilon Theory, so to ring out 2017 I thought it might be helpful to distribute a master list of our publications over the past 12 months. We’re long essay writers trying to make our way in a TLDR world, so even the most avid follower may well need a map!
The Three-Body Portfolio
In a two-body market, the interactions of fundamental data and prices are generally predictable. In a three-body market, the epsilon — investor behaviors in response to narratives — exerts a powerful gravitational force which must be considered when building a portfolio.
The Three-Body Problem
What if I told you that the dominant strategies for human investing are, without exception, algorithms and derivatives? I don’t mean computer-driven investing, I mean good old-fashioned human investing … stock-picking and the like. And what if I told you that these algorithms and derivatives might all be broken today? You might want to sit down for Part 9 of the Notes from the Field series.
Wall Street’s Merry Pranks: Things that Matter #4
The libertarian paternalism of a Nudge culture in finance has created an industry of investors who care about fees but have forgotten about taxes, trading costs, slippage and behavioral costs of actively trading passive instruments.
Pecking Order
The pecking order is a social system designed to preserve economic inequality: inequality of food for chickens, inequality of wealth for humans. We are trained and told by Team Elite that the pecking order is not a real and brutal thing in the human species, but this is a lie. It is an intentional lie, formed by two powerful Narratives: trickle-down monetary policy and massive student debt financing. Part 8 of the Notes from the Field series.
The Two Churchills
If you can manage to find a truly independent voice in your personal, political and financial life, pursue it with reckless abandon. Don’t set it to the side so that you can build a brand or make an impact. Get your ass out of the boat, grab your bow, strap on your broadsword and sound the pipes. All that’s left is to decide what song you’re going to play.
Make America Good Again
On episode 26 of the Epsilon Theory podcast, we welcome back Rusty Guinn, our executive vice president of asset management, to talk about political markets — a topic just as important to Ben as capital markets. Be sure to also check out the companion pieces to this podcast: “Always Go To the Funeral,” “Sheep Logic,” and “Before and After the Storm.”
Harvey Weinstein and the Common Knowledge Game
It was no great secret that Weinstein was and is a serial rapist. Apparently everyone in Hollywood was familiar with the stories. It was ubiquitous private knowledge, and pretty darn ubiquitous public knowledge. I mean, if you’re making jokes about it on 30 Rock, it’s not exactly a state secret.
But there was never a Missionary.
The Myth of Market In-Itself: Things That Matter #3, Pt. 2
The behaviors that influence markets must be considered in context of archetypes, the languages and identities which group investors every bit as much as identity politics groups voters.
Clever Hans
Part 7 of Ben’s Notes from the Field series reminds us that you don’t break a wild horse by crushing its spirit. You nudge it into willingly surrendering its autonomy. Because once you’re trained to welcome the saddle, you’re going to take the bit. We are Clever Hans, dutifully hanging on every word or signal from the Nudging Fed and the Nudging Street as we stomp out our investment behavior.
Gandalf, GZA and Granovetter
When we try to define others’ Cartoon, we take away their agency, and strip away their humanity. And we do it with our clients, every time we guess what behavioral box they fit it.
Failure to Inflate
On episode 25 of the Epsilon Theory podcast, we’re joined by Peter Cecchini, Chief Market Strategist, Head of Equity Derivatives and Cross-Asset Strategy at Cantor Fitzgerald, to discuss one of his recent notes, “Failure to Inflate.” As Peter writes, “The theories that guide monetary policy fail to explain why growth and inflation remain so low in developed economies.” Tune in to hear why this is and what might bring about higher inflation.
Massively Fast Compute, AI Algorithms and Blockchain Development (by Silly Rabbit)
I’m limiting this week’s Rabbit Hole to three links which represent the rapid tick-tock of the trifecta of massively fast compute, AI algorithms and blockchain development as I believe that these are the top three technology mega-trends of the 2015 – 2025 period (ex-Life Sciences innovation).
Sheep Logic
In Part 6 of the Notes from the Field Series, Ben observes that we think we are wolves, living by the logic of the pack. In truth we are sheep, living by the logic of the flock.
Information Bottlenecks, Fake News and Boredom (by Silly Rabbit)
A new idea called the “information bottleneck” is helping to explain the puzzling success of today’s artificial-intelligence algorithms — and might also explain how human brains learn.
The Myth of Market In-Itself: Things That Matter #3, Pt. 1
Benjamin Graham famously said that the market is a voting machine in the short run, and a weighing machine in the long run. This is a right-sounding idea. It is also wrong. Behavior matters over every horizon.
The Jukebox Theory
We’re back with episode 24 of the Epsilon Theory podcast! Ben shares his thoughts on the inflation narrative and a new idea reminiscent of C-SPAN to make politics at every level more transparent and engaging.
Youth, Immutable Content, and the Secondhand Scoop (by Silly Rabbit)
This week’s Rabbit Hole column is more thematic with recent links that I found interesting around the topic of ‘news,’ on which Ben wrote the defining commentary of recent years with Fiat Money, Fiat News.
Mailbag! Fall 2017 Edition
Back by popular demand, it’s the Epsilon Theory Mailbag! “Always Go To the Funeral” and “The Arborist” Another rifle shot to the crux of the…